How Much Money Does the Average American Get From Social Security?

A protester holds a sign supporting social security

A protester holds a sign supporting Social Security. | Spencer Platt/Getty Images

You can expect to hear a lot about Social Security in coming years. The program, which has helped keep America’s seniors out of poverty for decades now, is in trouble. And policymakers are reluctant to try to remedy the situation. Still, millions of people depend — or will depend — on Social Security to get them through their golden years.

And that’s one of the biggest issues with the program: The people who depend on it now are rapidly burning through what’s supposed to be used later. With time, Social Security will become insolvent, and if we don’t take any action to sort it out soon, we’ll have a very big and ugly mess on our hands.

The truth is the average American needs to be doing a better job of planning for retirement. At some point, your body isn’t going to be able to keep working. You’ll get sick or hurt, or structural economic changes will force you out of the labor pool. It’s going to happen to everybody sooner or later. And depending on Social Security alone as a source of income in your later years isn’t going to cut it.

How do you know? Just look at what the average person receives from social security. We’ll also take a quick look at how you can maximize your benefits.

Social Security: A primer

The door to a Social Security office

The door to a Social Security office | Justin Sullivan/Getty Images

Let’s quickly recap what Social Security actually is. For younger generations, they might have heard the term used on the news or from their grandparents. But typically, a young American has no experience dealing with the Social Security Administration or really giving it much thought. In all likelihood, a teenager or 20-something might only see it eats up a part of your paycheck.

And yes, that’s precisely how it works. You pay into the system when you’re young and withdraw when you reach retirement age. The amount that is withheld from your paychecks depends on how much you earn, up to a threshold of $127,200. Basically, the government takes 12.4% of your wages in the form of Social Security taxes. You end up paying half of that, 6.2%, and your employer pays the other half. If you’re self-employed, you’re on the hook for the full 12.4%.

These numbers tend to fluctuate, but if you earn more than $127,200 in 2017, you won’t be taxed on any income above that threshold.

Social Security was originally devised and implemented by President Franklin Roosevelt back in 1935 through his signing of the Social Security Act. So the older folks receiving checks today have pretty much paid into the system their whole lives.

Next: The average amount Americans are receiving in 2017.

The average haul

Blank Social Security checks

Blank Social Security checks | William Thomas Cain/Getty Images

Now, back to the main question: How much does the average American actually get from the Social Security system? There isn’t a uniform answer, as there are many factors at play. But overall, numbers from the Social Security Administration show the average for all Social Security receipts is $1,249.55 per month, and for retired workers (over the age of 65), it’s $1,363.66 (as of February 2017).

Also, according to the Social Security Administration, there are more than 62 million people who draw from the system. That adds up to $955 billion in benefits in a given year, with benefits going to retired workers, disabled workers, and survivors of deceased workers. The lion’s share goes to retired workers, however, who eat up 71% of the total benefits paid.

We mentioned the system is in trouble, and here’s why. When the system was first introduced, people weren’t living as long. There also weren’t nearly as many American citizens to draw from it. The system is strained because, compared to 1940, people hitting the age of 65 are expected to live six years longer, on average, and there are more than 30 million more people of retirement age.

Next: You can increase your payout with a couple strategies.

Should you sign up early?

Social Security Benefits Application Form with pen and glasses

Social Security benefits application form |

Now, what’s this about “retired workers”? Can you start receiving benefits before the age of 65? Well, actually you can. But you might not want to.

Legally, you can sign up and start drawing from the system once you hit 62. But there are incentives in place to try to dissuade people from signing up early, as the more people who start drawing the system, the more strained it becomes. The basic incentive system is such that if you wait longer to sign up — say, you wait until the age of 70 — you’ll receive more money.

Why, then, do people sign up early? Research suggests many people feel they’ll “miss out” if they don’t immediately start receiving checks. A study from the National Bureau of Economic Research Retirement Center said, “We consistently find that higher levels of loss aversion predict individuals’ preference for claiming Social Security benefits early.”

So, people sign up, leaving “future” money on the table, because they don’t want to miss out on the money they can receive immediately. But that’s not the only reason, and that’s important to keep in mind, too. And again, there are ways to increase that amount.

Next: Five simple steps to maximize your Social Security benefits

Step by step: Maximizing your benefits

financial documents

Financial documents |

1. Wait

Step one is to wait. It’s as simple as that. This truly is the easiest way you can maximize your benefits, especially if you’re in your 60s. We touched on this before. There are incentives to keep you from signing up at age 62, and you should take advantage. Sure, “loss aversion” might eat away at your patience, but if you can make it to 65 or even 70, your checks will be bigger.

Next: The amount of money you make now matters.

2. Do what you can to earn more during working years

hand dropping money into a piggy bank.

Always put some money into savings. |

Younger folks, this one is for you. If you can find ways to earn more during your prime working years, it’ll benefit you in a big way down the road. Obviously, getting a raise or higher-paying job is something we’d all do if we could. But start thinking long term. You’ll need the extra money down the road, not just to buy the latest toys today. There’s even a calculator to see the impact a bigger paycheck today will have on your Social Security benefits later.

Earning, though, isn’t the only key here. You also have to save more.

Next: Don’t be a debt slave.

3. Take care of your debts


Debt |

This is for everyone, regardless of age: Wipe out your debts. This, of course, is another piece of “no duh” advice, just like “earn more money” is. The trick, if you’re young, is to avoid getting yourself into useless debt. You can take out a mortgage or loans to pay for college, but you want to avoid racking up unnecessary credit card debt. If you’re in your 50s or 60s, start looking at ways to pay off your debt. Certain types can be garnished from your checks down the road.

Next: Additional benefits may be available.

4. Look for additional benefits


Counting cash | Juan Barreto/AFP/Getty Images

There are some additional benefits out there you can take advantage of if you’re savvy. For example, you can receive extra benefits if you have dependents under the age of 18, which includes grandchildren. If you are a widow or widower, you can earn survivor benefits, too. Also, there are spousal benefits you can qualify for, particularly if you haven’t worked for a long time.

Next: Don’t be afraid of professional help.

5. Hire professional help

Personal finance statements

Personal finance statements |

Finally, it might be worth it to bite the bullet and hire some professional help. All of this stuff, just like taxes, can add up to anxiety-inducing nightmare fuel, especially if you’re not used to looking over government documents and financial forms. A pro can help guide you through the process, let you know what benefits might apply to you, and do his or her best to maximize your post-retirement income.

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